San Francisco-based cryptocurrency exchange Coinbase recently announced that the company is planning a direct listing rather than following the path of going public (IPO). The decision means that Coinbase will be able to place its shares on an exchange without hiring a financial institution to subscribe to the settlements.
Coinbase skips the IPO process, shoots for a direct listing
Just recently, people familiar with the matter received a notice that the stock exchange giant Coinbase had plans to sell shares privately prior to going public. In mid-December, Coinbase announced the confidential filing of an S-1 IPO with the US Securities and Exchange Commission.
However, on January 28, 2021, Coinbase announced a proposed direct listing as opposed to the originally planned IPO. For example, a few weeks earlier, rumors had spread that Goldman Sachs would be the stock exchange’s underwriter.
On Thursday Coinbase wrote:
Coinbase Global, Inc. today announced its intention to become a publicly traded company under a proposed direct listing of its Class A common shares. Such a proposed listing is expected to be made under a registration statement on Form S-1 with the Securities and Exchange Commission (the “SEC”).
Crypto Proponents See ‘Strong Market Demand’ For Coinbase Stock
Of course, the crypto community began to speculate as to why Coinbase chose to go directly to listing rather than going public. James Todaro, MD, partner at Greymatter Capital, explained a few reasons he believes Coinbase chose this route.
“Possible main reasons,” tweeted Todaro. “Strong market demand / no help required to generate liquidity, [and] No blocking for early investors (can sell shares immediately). I think early investors see market euphoria coming, ”added Todaro.
In addition, direct listing seems to be more of the popular route for some companies than going public these days. Popular video game company Roblox chose to go direct, and several others are choosing to debut in the public stock markets.
Coinbase will be able to skip the components of an IPO through floating shares with no middlemen. The San Francisco-based crypto company can sell stocks directly to the public without dealing with the marketing of new equity and the need for investment banks to subscribe to transactions.
What do you think of Coinbase for a direct listing instead of an IPO? Let us know what you think on this matter in the comments section below.
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CBSE / USD, Coinbase, Coinbase Futures, Coinbase IPO, crypto exchange, direct listing, finance, Goldman Sachs, Greymatter Capital, IPO, IPO, James Todaro, new equity, public sale, Roblox, stocks, shares, trading platform, Underwriter
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